Emerging ETF Slumps Most in Six Weeks Amid Fed’s Outlook

March 19 (Bloomberg) -- The iShares MSCI Emerging Markets
Index declined the most in six weeks after the Federal Reserve
outlined its plan for exiting stimulus measures that have
spurred a rally in developing-nation equities.

The exchange-traded fund slumped 2.1 percent to $38.57 at 4
p.m. in New York. The MSCI Emerging Markets Index dropped 0.2
percent to 950.59. Russia’s Micex Index led declines among major
developing-nation equity benchmarks. China’s yuan retreated
below 6.20 per dollar for the first time since April, while the
overnight money-market rate advanced to a one-month high and
property companies spurred a slide in stocks.

U.S. central bank officials predicted their target interest
rate will be 1 percent at the end of 2015 and 2.25 percent a
year later, higher than previously forecast. Fed Chair Janet
Yellen said the stimulus program could end this fall and
interest rates could rise six months later. The benchmark gauge
for shares in developing nations has retreated as much as 16
percent since May 22, when the Fed signaled its bond-buying
could be trimmed if the economy showed sustained improvement.

“It’s a ‘risk-off’ response,” Michael Holland, who
oversees more than $4 billion as chairman of Holland & Co. in
New York, said in a phone interview. “When there’s any question
about whether the Fed might take off, than the market has the
kind of response we had today.”

Brazil’s Ibovespa rose for a third day as health-insurance
broker Qualicorp SA surged after fourth-quarter earnings
exceeded analysts’ estimates. Petroleo Brasileiro SA, the
government-controlled oil company, contributed the most to the
gauge’s advance.

Russia, China

The ruble strengthened for a third day as Russia pushed on
with its annexation of Crimea and investors wagered the impact
of Western sanctions will be mild. The Micex Index, which slid
into a bear market last week, dropped 1.3 percent, snapping the
biggest two-day advance since May 2010.

The overnight repurchase rate, a gauge of interbank
liquidity, rose 57 basis points to 3.46 percent in Shanghai, the
highest since March 4, according to a weighted average from the
National Interbank Funding Center.

The premium investors demand to own emerging-market debt
over U.S. Treasuries fell 0.11 percentage point to 311 basis
points, according to JPMorgan Chase & Co.